Ichigo Office(8975)

Ichigo Office REIT April 2017 Fiscal Period
Corporate Presentation
June 14, 2017

Ichigo Office REIT Investment Corporation (8975)
Ichigo Investment Advisors Co., Ltd.

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

www.ichigo-office.co.jp/english

Ichigo Preserves andImproves Real Estate© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

April 2017 Results
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April 2017 Highlights
April 2017 Earnings
April 2017 Financial Metrics
14 Consecutive Periods of Dividend Growth – No. 1 vs. All J-REITs
Continued Growth in Base EPS & NAV
Ongoing High Occupancy: 98.5%
Organic Growth (1) Existing Tenants at Higher Rents
Organic Growth (2) New Tenants at Higher Rents
Organic Growth (3) Ongoing Rental Growth

Ichigo Office REIT Growth Strategy
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Executing on Growth Strategy as Specialized Office REIT
Ichigo Office REIT Growth Strategy Roadmap
Rapid Re-Tenanting at Vacancies
October 2017 Leasing Plan
Value-Add Capex
Environmental Sustainability Initiatives
Building a Trusted Ichigo Brand
Increasing Post-Acquisition NOI
Increased Portfolio Size and Quality
Rapid NOI Growth at Prime Location Assets
Increased NOI and Portfolio Quality
Sponsor Pipeline
October 2017 Forecast
April 2018 Forecast

Appendix Financial & Portfolio Data/About Ichigo Office REIT
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

4

April 2017 Results© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

5April 2017 Highlights
Achievements

Drivers

External Growth• Acquired 1 Asset (JPY 3.5B) & Contracted
to Acquire 3 Assets (JPY 7B)• Sold 4 Assets (Capital Gain JPY 37M)

• Increased portfolio scale, quality, and stability via
acquiring Tokyo office assets and selling 4 nonoffice assets with significant on-going costs

Organic Growth• Increased Occupancy to 98.6%(+0.4% vs. October 2016)• 55 Upward Rent Renewals(+6.3% average increase)• No rent decreases for all 191 lease renewals• Rent increases in 66% of tenant turnovers• Trusted Ichigo brand increasing competitiveness• New Loans JPY 3B• Loan Prepayment of JPY 3.6B higher costloan
• Additional New Loans JPY 7B (May 2017)• Diverse funding sources• Average interest rate 1.02%(-4bps vs. October 2016)• Lowered average interest rate via new loans(previous loans: 1.79%, new loans: 0.75%)

Base EPS1

JPY 1,682• +JPY 14 (+0.8%) vs. initial forecast of JPY 1,668• Newly acquired assets and NOI growth at existing
assets supporting earnings growth

FFO2

JPY 2,285

DPS

JPY 1,923

NAV3

JPY 78,336

Financing(+JPY 80, +5.0% vs. October 2016)(+JPY 81, +3.7% vs. October 2016)(+JPY 19, +1.0% vs. October 2016)(+JPY 1,936, +2.5% vs. October 2016)

1 Base EPS = EPS - Capital Gains/Losses

2 FFO = Funds from Operations• FFO increases driving dividend growth• +JPY 13, +0.7% vs. forecast of JPY 1,910• +JPY 3.2B unrealized gain via value-add
3 NAV = BPS + Unrealized Capital Gains© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

6

April 2017 Earnings(JPY million)
October 2016
Actual (A)April 2017
Actual (B)April 2017
Forecast (C)vs. Forecast(B) - (C)Operating Revenue

7,090

7,352

7,247

+105

Operating Profit

3,405

3,378

3,277

+101

Recurring Profit

2,462

2,616

2,556

+59

Net Income

2,462

2,615

2,556

+59

JPY 1,607

JPY 1,706

JPY 1,668+JPY 38

461

370

370

–

DPS

JPY 1,904

JPY 1,923

JPY 1,910+JPY 13

NOI

5,073

5,279

5,175

+103

Occupancy

98.2%

98.6%

97.2%

+1.4%

EPS
Dividend Reserve Reversal

Major Variation Factors (vs. April 2017 Forecast)Rental Income +67
・ Common area services income +43(Ichigo Shibuya Udagawacho Building +8)(Ichigo Higashi Gotanda Building +7)(Ichigo Omori Building +6)(Ichigo Ebisu Nishi Building +5)
・ Lease termination penalties +21
Other Operating Revenue +37
・ Gain on asset sale in April 2017 period +37
Decrease in Rental Expenses -37
・ Increase in service provider expenses +14
・ Decrease in utilities expenses -65
・ Increase in maintenance fees +15
Increase in Operating Expenses (excluding rental expenses) +41
・ Increase in AM fees due to asset sale +11
・ Increase in allowance for doubtful accounts +4
・ Non-deductible consumption taxes +23
Increase in Non-Operating Expenses +44
・ Decrease in interest expenses -5
・ Increase in up-front loan fees & related expenses +49
Reference: Capex
・ October 2016 Actual: JPY 454M
・ April 2017 Forecast: JPY 786M
JPY 570M
・ April 2017 Actual:
Reference: April 2017 Post-Dividend Reserves
・ Reserve for adjustment of temporary differences (negative
goodwill): JPY 10,062M
・ Dividend Reserve: JPY 659M

* NOI = Rental Income - Rental Expenses + Depreciation
Occupancy is Period-End.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

7

April 2017 Financial Metrics

April 2016

October 2016

April 2017

FFO

JPY 2,160

JPY 2,204

JPY 2,285

DPS

JPY 1,740

JPY 1,904

JPY 1,923

NAV

JPY 73,493

JPY 76,400

JPY 78,336

LTV

43.1%

46.0%

45.7%

Average Interest Rate
(All Loans)

1.14%

1.06%

1.02%

–

0.76%

0.65%

(Average Interest Rate of New Loans)* FFO = Net Income + Depreciation + Loss on Disposal of Fixed Assets + Liability for Asset Retirement Obligation + Loss on Asset Sale Gain on Asset Sale + Extraordinary Gain per Share – Extraordinary Loss per ShareLTV = Interest-Bearing Liabilities/Total Assets© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

8

14 Consecutive Periods of Dividend Growth – No. 1 vs. All J-REITs

(JPY)

1,387

1,494

1,537

1,541

1,547

April
2013

October
2013

April
2014

October
2014

1,603

1,706

1,740

October
2015

April
2016

1,904

1,923

October
2016

April
2017

1,219
899

979

1,031

April
2011

October
2011

737

April
2010

October
2010

April
2012

October
2012

April
2015

* April 2010 to October 2011 dividends adjusted to reflect stock split on November 1, 2011
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

9

Continued Growth in Base EPS & NAV (1)+13% YOY Base EPS Growth (vs. April 2016)(JPY)

Reserve Release
Base EPS

1,930
164

1,940
155

1,682

1,766

1,785

April 2017

October 2017
(Forecast)April 2018
(Forecast)

1,904
1,740
302

1,923

1,489

1,602

April 2016

October 2016

1,740
251

241

* Base EPS = EPS - Capital Gains/Losses© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

10

Continued Growth in Base EPS & NAV (2)Increased Portfolio Quality & Scale Also Driving Higher NAV(JPY)+24.1%

70,11773,49376,40078,336

October 2016

April 201763,140April 2015

October 2015

April 2016

NAV per Share© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

11

Ongoing High Occupancy: 98.5%
Occupancy

Average Rent per Tsubo (3.3 m2)

100%
Free Rent-Adjusted Occupancy

98.5%

97.4%
96.1%

96.0%

(JPY)

Office (Total)

Occupancy

98.5%

Office (Central Tokyo)

16,600

97.1%

95.8%

95%

13,60016,30014,00016,40014,30016,50013,90016,80014,100

95.5%
94.2%

94.0%

90%
Apr 2015

Oct 2015* Occupancy is Period-End

Apr 2016

Oct 2016

Apr 2017

Apr 2015

Oct 2015

Apr 2016

Oct 2016

Apr 2017

Total Office

48 Assets

61 Assets

58 Assets

70 Assets

71 Assets(Central Tokyo)(26 Assets)(36 Assets)(36 Assets)(39 Assets)(40 Assets)© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

12Organic Growth (1) Existing Tenants at Higher Rents
New Rent Level vs. Previous Rent Level(By Leased Area)

Downward

Flat

1.2%

0.7%

Lease Renewals

Downward:
0 tenants

Upward(Monthly rent, JPY thousand)UpwardDownward

Rent Change

2.3%

4,268

3,448

Flat:
136 tenants

58.7%+4,268

66.9%

2,110
+3,374

82.1%
96.9%

+1,994
Upward:55 tenants
Average increase:
+6.3%

220

40.6%

+75
33.1%
15.6%

-145

-74

-115

Oct 2015

Apr 2016

Oct 2016

1.9%
Oct 2015

1,888

Apr 2016

Oct 2016

0
Apr 2017

0
Oct 2017 andafter

Apr 2017* October 2017 and after reflects leases in place as of May 31, 2017.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

13

Organic Growth (2) New Tenants at Higher Rents
New Tenant Rent vs. Previous Tenant Rent
(By Leased Area)
Downward

Flat

Impact on Rental Income from Tenant TurnoverUpwardUpward

26.4%

29.6%
36.2%
42.9%

7.2%

Downward

Flat:
5 new tenants+2,937

12.7%

1,996
Upward:29 new tenants
Average increase:+13.7%

20.2%(Monthly rent, JPY thousand)

5,343

Downward:
10 new tenants
Average decrease:-12.9%

13.3%

Rent Change

2,887+1,770

1,626
+883

864

66.4%
57.7%
50.5%

-158

-407

36.9%

-1,114-1,117-2,034-2,407

Oct 2015

Apr 2016

Oct 2016

Apr 2017

Oct 2015

Apr 2016

Oct 2016

Apr 2017

Oct 2017 andafter* October 2017 and after reflects leases in place as of May 31, 2017.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

14

Organic Growth (3) Ongoing Rental Growth
New Tenant/
Increased Space

Departing Tenant/Decreased Space

Renewals at
Higher Rent

-29

+4.3

+33

Change due totenant movements+JPY 3.6M (+0.3%)

1,034

October 2016

(JPY million)

Change due tolease renewals+JPY 4.3M (+0.4%)

1,042
+1.5%

Monthly Rent

April 2017

Change in Occupancy:
98.5% (October 2016)  98.6% (April 2017)* Change in Occupancy is like-for-like and thus excludes newly acquired assets.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

15

Ichigo Office REIT Growth Strategy© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

16

Executing on Growth Strategy as Specialized Office REIT
Achievements since April 2015 Fiscal Period
 Organic Growth Strategy− High occupancy (98.6%)− Increased NOI via higher rents at renewals and new tenants
 External Growth Strategy− Portfolio growth (+JPY 66.5B, +54%)− Increased office weighting (Currently 90%, +12%)− NAV growth (+JPY 15,196 per share, +24.1%)
 Financing− Expanded lender base and de-collateralized all loans− Acquired an A- (Stable) credit rating (JCR)− Lowered average interest rates (1.23% → 1.02%) and increased
fixed-rate loans to >80%
− 2 public offerings increased shareholder capital by 15% and shares
outstanding by 8%
 Dividend− 14 consecutive increases in DPS (+JPY 320, +20%)* Above calculations reflect changes between April 2015 period (before specialized-office REIT transition) and April 2017 period.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

17

Ichigo Office REIT Growth Strategy Roadmap
Stage VI

2011/10

2016/10Goals

2017/4Grow Office Portfolio■ Organic Growth Strategy
Drive growth with strong Ichigo Office brandand 100 asset portfolio
・Increase competitiveness of Ichigo assets via
strong Ichigo brand・Develop original services for Ichigo tenants
・Drive higher rents within and outside of Tokyo・Maximum return on capex

Action Plans■ External Growth Strategy
Aim for portfolio size of JPY 230B
・Broaden acquisition pipeline via diversified
sourcing
・Use Ichigo sponsor support and diversified
funding capability to close quickly underdeadline■ Financing Strategy
Improve credit rating and diversify funding・Achieve an A (Stable) credit rating
・ Consider issuance of REIT bonds andbroadening lender base・ Use financial strength and commitment line togrow acquisition capacity
・Further improve borrowing terms
・Enter global REIT indicesStage VII2017/10

2018/42018/10Lay Foundation for Long-Term Growth
Durably and Dynamically Grow Ichigo Office REIT
Generate Funds to Invest for Growth・Secure funds for growth investments via strategic portfolio
restructuring and sale of non-office assets
・Rework implementation of dividend reserve releases
Invest for Sustainable Growth in Shareholder Value・Acquire high-quality assets via portfolio restructuring or usingborrowing capacity
・Carry out value-add capex■ Organic Growth Strategy
・Achieve minimal downtime between leases
・Carry out value-add capex to drive higher returns
・Implement environmental sustainability initiatives to grow longterm value
・Build a trusted Ichigo brand■ External Growth Strategy
・Restructure portfolio to drive higher portfolio quality
・Acquire assets to increase shareholder value
・Consider M&A■ Financing Strategy
・ Further improve borrowing terms
・ Diversify funding via issuance of REIT bonds
・ Raise credit rating
・ Enter global REIT indices© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

18

Organic Growth

Rapid Re-Tenanting at Vacancies
Newly Leased and Newly Vacated Space(m2)

12,558

Newly Leased
Newly Vacated

5,108

April 2017

7,153

6,772
5,372

• Minimal downtime between leases• Increased rents at re-tenanting
TBD-5,911-5,501-4,730-6,498-5,652October 2017 Plan

-10,502

Apr 2015

Oct 2015

Apr 2016

Oct 2016

Apr 2017

Oct 2017

Newly Leased

7.2%

5.6%

7.4%

11.3%

6.4%

TBD

Newly Vacated

8.3%

5.8%

5.3%

9.5%

5.8%

4.9%

Net Leasing (m2)

-804

-129

+ 2,043+ 2,056

+ 656

TBD

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

• Forecast includes expectedvacancies• Strong office leasing market
supportive• Continue focus on tenant needs• Goals: Minimize lease downtime andincrease rents

19Organic Growth

October 2017 Leasing Plan

No.

Asset Name

Location

Leasable
Area

Expiring
Lease

Lease
Termination
Date

Strategy

O-88 Oimachi Center Building

Shinagawa-ku,
Tokyo

2,748m 2

610m 2(currently
vacant)・Strengthen marketing to increase asset's recognition among tenants
・Sub-divide units to meet tenant needs for smaller office space

O-54 Ichigo Omiya Building

Omiya City,
Saitama

6,180m 2757m 2Jun 2017 to
Oct 2017

・Target tenants with branch office and sales office needs
・Attract tenants with new air conditioning system and provision of ample parking

O-77 Ichigo Ikenohata Building

Taito-ku, Tokyo

5,504m 2604m 2

Jul 2017

・Add QR code to leasing materials to access promotional video for the building
・Renovate common areas

O-20 Ichigo Gotanda Building

Shinagawa-ku,
Tokyo

5,346m 2

1,925m 2

Nov 2017

・Prime-location asset facing Gotanda Station with potential for redevelopment
・Lease with fixed-term contracts to allow for potential sales to developers

O-65 Ichigo Shinkawa Building

Chuo-ku, Tokyo

2,312m 2

1,032m 2

Nov 2017

・Renovate common areas
・Minimize downtime via strengthening marketing and increasing recognition

Toshima-ku,
Tokyo

4,553m 2

1,069m 2

Nov 2017

・Sub-divide units to meet tenant needs for smaller office space
・Increase rent at tenant replacements given strong tenant demand

O-69

Ichigo Higashi Ikebukuro
Building© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

20

Organic Growth

Value-Add Capex
Renovations to Further Enhance Competitiveness and Profitability
Economics

Ichigo Mita Building (Minato-ku, Tokyo)
・Rapidly renovated common areas,
including restrooms and office pantries,
on vacated floors
・Promote awareness of the newly
renovated common areas which drive
tenant satisfaction
・Brought in new tenants quickly and at
higher rents

Investment

Average Rent per Tsubo (3.3m2)

JPY 8M

Before JPY 14,200

NOI Annual Increase

JPY 5M

After

JPY 15,000(+5.6%)

Investment Return

64.7% p.a.
Occupancy
October 2016

100.0%
April 201778.3%
After June 1, 2017
BeforeAfter© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

100.0%
21

Organic Growth

Environmental Sustainability Initiatives
CASBEE (Comprehensive Assessment System for Built Environment
Efficiency) Certification
 Ichigo Marunouchi Building: S Rank (Highest)
 Ichigo Kanda Nishikicho Building: A Rank

DBJ (Development Bank of Japan) Green Building Certification
 Ichigo Nihonbashi East Building: Three stars (Excellent Environmental andSocial Awareness)

BELS (Building-Housing Energy-efficiency Labeling System) Certification
 Ichigo Akihabara North Building: Two stars
IchigoMarunouchi
Building
S Rank★★★★★

Ichigo Kanda
Nishikicho
Building
A Rank★★★★

IchigoNihonbashi
East
Building★★★

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

IchigoAkihabara
North
Building★★

22

Organic Growth

Building a Trusted Ichigo Brand
Increase Recognition and Presence Update building names to reflect status as Ichigo Office REIT assets
 Ichigo brand signage on building exteriors, entrance mats & tenant
directories

Ichigo Shibuya East Building

Ichigo Nagoya Building

Ichigo Ikenohata Building© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Ichigo Nishi Honmachi Building

23

Organic Growth

Increasing Post-Acquisition NOI
November 2014 Public Offering

May 2015 Public Offering

May 2016 Public Offering

8

12

13

Acquisition Price

JPY 21.22B

JPY 44.03B

JPY 29.27B

Current Appraisal Value

JPY 23.45B

JPY 49.07B

JPY 30.95B

Years Since Acquisition

2.5

2

1

Number of Acquired Assets

Annual NOINOI Yield

Annual NOINOI Yield

Annual NOINOI Yield

April 2015

JPY 1,182M

5.6%

－

－

－

－

October 2015

JPY 1,200M

5.7%

JPY 1,921M

4.4%

－

－

April 2016

JPY 1,212M

5.7%

JPY 1,960M

4.5%

－

－

October 2016

JPY 1,213M

5.7%

JPY 1,845M

4.2%

JPY 1,433M

4.9%

April 2017

JPY 1,229M

5.8%

JPY 2,059M

4.7%

JPY 1,449M

5.0%

IchigoNihonbashi
East Building

IchigoIkenohata
Building

Example of Acquired Assets
Ebisu Green
Glass

IchigoIchigoOmori Burg Takadanobaba
Building
Building

IchigoJingumae
Building

Ichigo Shibuya
Dogenzaka
Building

Ichigo Nagoya
Building

IchigoNingyocho
Building* November 2014 Public Offering data excludes non-office assets© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

24External Growth

Increased Portfolio Size and Quality
Strategic Portfolio Restructuring via Sponsor Support(Acquisition price basis)

October 2016

April 2017

October 201713 Offices
JPY 29.2B

1 Office
JPY 3.5B

3 Offices
JPY 7.0B

AssetsAcquiredTokyo

Financing

New Share Issuance

New Loans

Objectives
・Increase office weighting
・Increase NOI・Increase NAV・Drive economies of scale
・Repay high-interest rate loans using proceeds fromthe asset sales and finance acquisitions with new
low-cost loans to lock-in low interest rates

Sold

1 Office Asset
JPY 0.9B

Tokyo

Portfolio Restructuring
Acquired 3 Tokyo Office Assets

Portfolio Restructuring
Sold 3 Serviced Apartments
and 1 Retail Asset

4 Non-Office Assets
JPY 4.6B© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Portfolio Size

JPY196.9B
25

External Growth

Rapid NOI Growth at Prime Location Assets
Ichigo Shibuya Udagawacho Building +33% NOI since Acquisition (Nov 2016) on Higher
Occupancy and Rents
Ichigo Shibuya Udagawacho Building

11 Assets in the Shibuya Area

At Acquisition

April 201767.3%
28,20088

Occupancy
Average Rent per Tsubo* (JPY)Annual NOI (JPY M)

89.1%
28,300117

Ebisu/Hiroo

Other Shibuya Assets Also Growing NOI
on Strong Office Demand
Ichigo Nanpeidai Building
October 2015

April 2016

October 2016

April 2017

Occupancy

100%

100%

100%

100%

Average Rent per Tsubo* (JPY)

17,90018,70019,40019,700

98

91

104

108

Annual NOI (JPY M)

Ichigo Shibuya Dogenzaka Building
October 2015

April 2016

October 2016

April 2017

Occupancy

100%

100%

100%

100%

Average Rent per Tsubo* (JPY)18,60018,60021,40021,400

115

147

60

187

Annual NOI (JPY M)* Office-use units only
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

26

External Growth

Increased NOI and Portfolio Quality
Acquired Three Tokyo Office Assets and Sold Four Tokyo Non-Office Assets

Sold

Acquired

Number of Assets

43

Acquisition Price

JPY 4.60B

JPY 7.08B–

100.0%

JPY 220M

JPY 350MNOI Yield

4.9%

5.0%

Post-Depreciation NOI Yield

4.1%

4.7%

Occupancy

92.4%

93.3%

9

25

Office %Annual NOI

Number of Tenants

Prime Location Office Assets in Tokyo
Win Gotanda Building

Ichigo Hongo Building

Oimachi Center Building

・Acquisition Price: JPY 3.1B

・Acquisition Price: JPY 2.3B

・Acquisition Price: JPY 1.68B

・NOI Yield: 5.0%
・Location: 3-min walk from
Gotanda Station on the JR
Yamanote Line・NOI Yield: 4.9%
・Location: 3-min walk from
Kasuga Station on the Toei
Mita Line・NOI Yield: 5.2%
・Location: 3-min walk from
Oimachi Station on the JR
Keihin Tohoku Line© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

27

External GrowthSponsor Pipeline
Ichigo (2337) Office Assets: JPY 60B
As of February 2017

Hakata Ekimae Square(Fukuoka)

Kakyouin Plaza(Sendai)

Tradepia Odaiba(Tokyo)MIF Building(Tokyo)Kichijoji Central Building(Tokyo)Ichigo Akasaka 317 Building Win Dai2 Gotanda Building(Tokyo)(Tokyo)© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Hakata MST(Fukuoka)

Takeyama Hakata Building(Fukuoka)28

October 2017 Forecast(JPY million)
April 2017
Actual (A)October 2017
Forecast (B)vs. April 2017(B) - (A)Operating Revenue

7,352

7,462

+109

Operating Profit

3,378

3,450

+71

Recurring Profit

2,616

2,707

+91

Net Income

2,615

2,706

+91

JPY 1,706

JPY 1,766+JPY 60

370

250

-119

EPS
Dividend Reserve Reversal
DPS

JPY 1,923

JPY 1,930+JPY 7

NOI

5,279

5,354

+ 75

Occupancy

98.6%

97.1%

-1.5%

Major Variation Factors (vs. April 2017)
Rental Income +147
・ Asset acquisition in October 2017 period +234
・ Asset sale in April 2016 period -162
[Existing Assets]
・ Common area services income +58(Ichigo Ebisu Nishi Building +12)
(Ichigo Marunouchi Building +10)
(Ichigo Jingumae Building +8)
・ Utilities Income +31
・ Lease termination penalties -16
Other Operating Revenue -37
・ Decrease in gain on asset sale in April 2017 period -37
Increase in Rental Expenses +73
・ Increase due to asset acquisition in October 2017 period +67
・ Decrease due to asset sale in April 2016 period -82[Existing Assets]
・ Increase in utilities expenses +67
・ Increase in property tax due to asset acquisitions in Oct 2016 and Apr 2017 periods+41
・ Decrease in maintenance fees -18
Decrease in Operating Expenses (excluding rental expenses) -35
・ Decrease in AM fees due to asset sale -11
・ Decrease in non-deductible consumption taxes -24
Decrease in Non-Operating Expenses -22
・ Decrease in up-front loan fees & related expenses -32
Reference: Capex
・ April 2017 Period: JPY 570M, October 2017 Forecast: JPY 635M

* NOI = Rental Income - Rental Expenses + Depreciation
Occupancy is Period-End.

Reference: October 2017 Post-Dividend Reserves
・ Reserve for adjustment of temporary differences (negative goodwill): JPY 9,862M,
Dividend reserve: JPY 608M

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

29

April 2018 Forecast(JPY million)
October 2017
Forecast (A)April 2018
Forecast (B)vs. October 2017(B) - (A)Operating Revenue

7,462

7,338

-123

Operating Profit

3,450

3,551

+101

Recurring Profit

2,707

2,735

+28

Net Income

2,706

2,735

+28

JPY 1,766

JPY 1,785+JPY 19

250

238

-12

DPS

JPY 1,930

JPY 1,940+JPY 10

NOI

5,354

5,292

-62

Occupancy

97.1%

96.8%

-0.3%

EPS
Dividend Reserve Reversal

Major Variation Factors (vs. October 2017 Forecast)Rental Income -123
・ Asset acquisition in October 2017 period +13[Existing Assets]
・ Common area services income -94(Ichigo Gotanda Building -45)
(Ichigo Shinkawa Building -21)
(Ichigo Higashi Ikebukuro Building -20)
・ Utilities Income -35
・ Lease termination penalties -5
Decrease in Rental Expenses -67
・ Increase due to asset acquisition in October 2017 period +1[Existing Assets]
・ Decrease in service provider expenses -13
・ Decrease in utilities expenses -23
・ Decrease in maintenance fees -17
・ Decrease in depreciation -7
Decrease in Operating Expenses (excluding rental expenses) -157
・ Increase in AM fees due to asset acquisition in October 2017 period +7
・ Decrease in performance fee to asset manager -165
Increase in Non-Operating Expenses +73
・ Decrease in interest expenses -5
・ Increase in up-front loan fees & related expenses +79
Reference: Capex
・ October 2017 Forecast: JPY 635M, April 2018 Forecast: JPY 504M
Reference: April 2018 Post-Dividend Reserves
・ Reserve for adjustment of temporary differences (negative goodwill): JPY 9,662M,
Dividend reserve: JPY 570M

* NOI = Rental Income - Rental Expenses + Depreciation
Occupancy is Period-End.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

30

Appendix: Financial & Portfolio Data

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

31

April 2017 vs. October 2016 Earnings(JPY million)

October 2016
Actual (A)April 2017
Actual (B)vs. October 2016(B) - (A)Operating Revenue

7,090

7,352

+262

Operating Profit

3,405

3,378

-26

Recurring Profit

2,462

2,616

+153

Net Income

2,462

2,615

+152

JPY 1,607

JPY 1,706+JPY 99

461

370

-91

DPS

JPY 1,904

JPY 1,923+JPY 19

NOI

5,073

5,279

+205

Occupancy

98.2%

98.6%

+0.4%

EPS
Dividend Reserve Reversal

Major Variation Factors (vs. October 2016)
Rental Income +240
・ Asset acquisition in October 2016 +111
・ Asset acquisition in April 2017 +69
・ Asset sale in October 2016 -50
・ Asset sale in April 2017 -20[Existing Assets]
・ Common area services income +147
(Ichigo Shibuya Dogenzaka Building +49)
(Ichigo Nihonbashi East Building +26)
・ Utilities Income -33
・ Lease termination penalties +20
Other Operating Revenue +21
・ Gain on asset sale in April 2017 +30
・ Decrease in TK dividend in October 2016 -9
Increase in Rental Expenses +38
・ Increase due to asset acquisition in October 2016 +88(of which is property tax +51)
・ Increase due to asset acquisition in April 2017 +14
・ Decrease due to asset sale in October 2016 -27[Existing Assets]
・ Decrease in service provider expenses -29
・ Decrease in utilities expenses -45
・ Increase in maintenance fees +41
Increase in Operating Expenses (excluding rental expenses) +250
・ Increase in AM fees on asset acquisition in October 2016 +39
・ Increase in performance fee to asset manager +170
Decrease in Non-Operating Expenses -177
・ Increase in up-front loan fees & related expenses -146
・ Decrease in new share issuance expenses -31*NOI = Rental Income - Rental Expenses + Depreciation
Occupancy is Period-End© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

32

Unrealized Portfolio Gain: Appraisal Value > Book Value
Unrealized Gain of JPY 21.0B (+JPY 3.2B vs. October 2016)(JPY million)
250,000

11.17%
Period-End Book Value

Period-End Appraisal Value

12%

9.36%

% Unrealized Gain

8.18%
207,537
200,000

5.13%
3.79%

173,447
164,977

1.55%

189,765

209,667

188,598

6%

174,955
161,7210.01%
150,000-2.95%

100,000

0%-1.57%-2.85%

103,310104,164
101,087
100,369

126,359
121,741
114,182
113,034
113,022
111,050
112,433
109,305-6%

50,000-12%
Oct 2012(67 assets)

Apr 2013(66 assets)

Oct 2013(68 assets)

Apr 2014(71 assets)

Oct 2014(70 assets)

Apr 2015(65 assets)

Oct 2015(77 assets)© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Apr 2016(73 assets)

Oct 2016(85 assets)

Apr 2017(82 assets)

33

April 2017 Asset Sale and Acquisition
With Sponsor Support, Improved Portfolio Quality and Increased Office Focus
Acquired Assets (April 2017 Period)
No.

O-85

Asset Name
Ichigo Shibuya
Udagawacho Building(JPY million)

O-86

O-87

O-88

Asset Name

Acquisition
Price

No.

Asset Name

Location

Sale Price

Shibuya-ku,
Tokyo

3,500

R-04

Ichigo Serviced
Apartments Takanawadai

Minato-ku,
Tokyo

990

R-06

B-SITE Hamamatsucho

Minato-ku,
Tokyo

616

R-09

Ichigo Serviced
Apartments Ginza

Chuo-ku,
Tokyo

1,034

Z-04

Ichigo Pagoda
Asakusa Building

Taito-ku,
Tokyo

1,850

(JPY million)
Location

Win Gotanda Building

Shinagawa-ku,
Tokyo

Ichigo Hongo Building

Bunkyo-ku,
Tokyo

Oimachi Center Building

Shinagawa-ku,
Tokyo

Acquired 4 Assets(JPY million)

Location

Acquired Assets (May 10, 2017)
No.

Sold Assets (April 2017 Period)

Acquisition
Price
3,100

2,300

Sold 4 Assets

4,490

1,680

10,580© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

34

Loan Details (1)Average Interest Rate and Loan Term
(Interest Rate)(Average Loan Term, Years)5

2.5%
Weighted Average Interest Rate
2.0%

Weighted Average Loan Term
4

4.2 years
3.8 years

3.7 years

1.53%

3.8 years

1.5%
1.23%

1.19%

2.6 years

1.14%

1.06%

3.5 years

3.6 years

1.02%

1.00%

3

1.0%

2

0.5%

1

0.0%

0
Oct 2014

Apr 2015

Oct 2015

Apr 2016

Oct 2016

Apr 2017

May 10, 2017

Fixed-to-Floating Rate Ratio
Fixed
Floating

27.1%

26.5%

19.9%

20.6%

16.6%

17.7%

18.1%

72.9%

73.5%

80.1%

79.4%

83.4%

82.3%

81.9%

Oct 2014

Apr 2015

Oct 2015

Apr 2016

Oct 2016

Apr 2017

May 10, 2017

Fixed*
Floating* Fixed includes
floating loans
fixed via
interest rate
swaps

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

35

Loan Details (2)Loan Maturity Distribution (as of May 10, 2017)
Floating
Fixed (includes floating loans fixed via interest rate swaps)

9,563

8,938

10,233

9,639

9,629

9,633

9,623

8,359

3,867

6,370

3,000

700

9,574

7,263

6,867
4,549

(JPY million)

892

3,400

3,000
1,204

Oct 2017 Apr 2018 Oct 2018 Apr 2019 Oct 2019 Apr 2020 Oct 2020 Apr 2021 Oct 2021 Apr 2022 Oct 2022 Apr 2023 Oct 2023 Apr 2024 Oct 2024 Apr 2025

LTV (as of April 30, 2017)
(%)
55
LTV

LTV (Market-Value Basis)*

50
45.2%
45

46.0%
43.7%

44.0%

42.3%

42.1%

43.1%

45.7%

LTV 40-50%

44.6%
40

42.4%
41.6%

40.1%

35
Oct 2014

Apr 2015

Oct 2015

Apr 2016© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Oct 2016* Market-Value= Total Assets +Unrealized Gains

Apr 2017

36

Lender Base and Credit Rating
Lender Base (as of April 30, 2017)
Lender(JPY million)
Balance

Lender Base (as of May 10, 2017)

Ratio

Lender(JPY million)
Balance

Ratio

SMBC

25,868

26.8%

SMBC

27,96827.0%Mizuho Bank

16,75617.3%

Mizuho Bank

18,156

17.5%

Shinsei Bank

12,426

12.9%

Shinsei Bank

13,526

13.0%

BTMU

11,440

11.8%

BTMU

11,440

11.0%

Aozora Bank

9,978

10.3%

Aozora Bank

9,978

9.6%

Resona Bank

8,555

8.8%

Resona Bank

8,955

8.6%

Bank of Fukuoka

3,093

3.2%

Bank of Fukuoka

3,093

2.9%

ORIX Bank

2,571

2.6%

Development Bank of Japan (new)

3,000

2.9%

Kagawa Bank

1,921

1.9%

ORIX Bank

2,571

2.4%

Mizuho Trust

1,707

1.7%

Kagawa Bank

1,921

1.8%

Development Bank of Japan (new)

1,000

1.0%

Mizuho Trust

1,707

1.6%

998

1.0%

Nishi-Nippon City Bank

998

0.9%

96,317–103,317–

Nishi-Nippon City Bank
Total

Total

Credit Rating
Credit Rating Agency

Type of Rating

RatingRating Outlook

Japan Credit Rating Agency(JCR)

Long-term Issuer Rating

A-

Stable© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

37

Survey Data: New & Departing Tenant Rationale
New Tenants

Oct 2015

Apr 2016

Oct 2016

Apr 2017

Departing Tenants

Opening a new office or moving to a better location

Moving to a different building for larger floor space or better location

Moving to a different building for larger floor space / adding floor space

Reducing cost or moving to a different building to integrate with other divisions

Reducing cost or floor space

Closing office

Other

Other

35.7%

25.0%

19.6%

36.4%

50.0%

10.7% 3.6%

Oct 2015

24.0%

70.0%

2.5%
2.5%

Apr 2016

19.0%

57.1%

14.3%

50.0%

8.9%

9.1% 4.5%

Oct 2016

Apr 2017

30.0%

22.9%

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

60.0%

47.6%

12.0% 4.0%

14.3%

52.5%

60.0%

19.0%

10.0% 7.5%

14.3% 2.9%38

April 2017 Leasing Outcomes
Location

October 2016
Occupancy

April 2017
Occupancy

Minato-ku, Tokyo

88.0%

100.0%

2・Acquired 3 new tenants (total 249m )O-24 Ichigo Eitai Building

Koto-ku, Tokyo

84.0%

100.0%

2・Acquired 2 new tenants (total 416m )O-28 Ichigo Nishi Gotanda Building

Shinagawa-ku,
Tokyo

88.6%

100.0%

2・Acquired 1 new tenant (156m )O-66 Ichigo Kudan Building

Chiyoda-ku, Tokyo

88.0%

100.0%

2・Acquired 1 new tenant (371m )O-82 Ichigo Fushimi Building

Nagoya

87.6%

92.8%

2
・Acquired 3 new tenants (total 85m ),2
and 1 new tenant (80m ) for October 2017 period

Shibuya-ku, Tokyo

67.3%*

89.1%

2
・Acquired 2 new tenants (total 325m )

No.

O-08

O-85

Asset Name
Ichigo Akasaka 5 Chome
Building

Ichigo Shibuya Udagawacho
Building

Progress

O-03 Ichigo Mita Building

Minato-ku, Tokyo

100.0%

78.3%

2
・1,288m vacated by 1 tenant22・Acquired 1 new tenant (421m ), and 2 new tenants (total 895m ) for
October 2017 (change in leased area)

O-50 Ichigo Hatchobori Building

Chuo-ku, Tokyo

100.0%

100.0%

2
・400m vacated by 1 tenant
2・Acquired 1 new tenant (400m )O-59 Ichigo Jingumae Building

Shibuya-ku, Tokyo

97.0%

97.0%

2
・276m vacated by 1 tenant
2・Acquired 1 new tenant (313m ) (change in leased area)

O-62 Ichigo Sasazuka Building

Shibuya-ku, Tokyo

100.0%

94.4%

2
・359m vacated by 1 tenant
2・Acquired 1 new tenant (359m ) for October 2017

Ichigo Higashi Ikebukuro
Building

Toshima-ku, Tokyo

100.0%

100.0%

2
・Total 656m vacated by 3 tenants
2・Acquired 3 new tenants (total 656m )O-69* As of the acquisition date (November 2, 2016)© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

39

Lease Renewals
April 2017: Change in Monthly Rent by Asset Type((JPY million)

Oct 31, 2016
(A)

New
Contracts

Contract
Terminations

Downward

Asset
Acquisition

Office

923

34

-28

4

–

9

–

943

+19

+10

Other

135

1

–

–

–

–

-25

111

-24

–

Total

1,058

35

-29

4

–

9

-25

1,054

-4

+10

UpwardAsset
Sale

Apr 30, 2017
(B)

Change(A) - (B)

Change at
Existing Assets

April 2017: Lease Renewals by Asset Type (Office/Other)
Asset Type
UpwardDownward

Flat

Total

No. of Assets

Leased Area

Change in Rent
(Entire Period)

Change from
Previous Rent

55

16,826m2+JPY 25.6M

+6.3%

Other

1

145m

2

+JPY 0.2M+10.0%

Total

56

16,972m2+JPY 25.8M+6.4%

Office

–

–

–

–

Other

–

–

–

–

Total

–

–

Office

–

–

2

–

–

Office136

34,074m

Other

13

3,856m2

–

–

Total

149

37,931m2––

Office191

50,901 m2+JPY 25.6M

+2.2%

Other

14

4,002m2+JPY 0.2M

+5.0%

205

2

+JPY 25.8M

+2.2%

Total

54,903m© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

40

Leased Area
April 2017: Leased Area by Asset Type (Office/Other)((m²)
Oct 31, 2016

New
Contracts

Contract
Terminations

Asset
Acquisition

Asset
Sale

Apr 30, 2017

Change at
Existing Assets

ChangeOffice218,851

7,153-6,497

1,003–

220,510+1,659

+655

Other

33,601

276

-177

–

-4,33029,370-4,231+99

Total

252,453

7,429-6,674

1,003-4,330249,881-2,572+754

April 2017: New Leases & Lease Terminations by Asset Type (Office/Other)
New Leases

Lease Terminations
Asset Type

UpwardDownward

Flat

Total

No. ofAssetsLeasedArea

Change in Rent
(Entire Period)

Change from
Previous Rent

No. ofAssetsLeasedArea

Change in Rent
(Entire Period)

Change from
Previous Rent

Office29

4,752m2+JPY 142M+13.7%

Office35

6,497m2-JPY 171M

–

Other

1

130m2

+JPY 3M+11.1%

Other

2

177m2

-JPY 4M

–

Total

30

4,883m2+JPY 146M+13.6%

Total

37

6,674m2-JPY 175M–

Office10

1,886m2+JPY 45M-12.9%

Other

1

145m2

+JPY 2M

-8.1%

Total

11

2,032m2+JPY 47M-12.7%

Office5514m2+JPY 40M

–

Other

–
－

–
－

–

–

Total

5

514m2

+JPY 40M–

Office44

7,153m2+JPY 362M

+5.3%

Other

2

276m2

+JPY 5M

+2.0%

Total

46

7,429m2+JPY 367M+5.2%© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

41

Rents Increasing with Market Rents
Rising Market Rents Increasing Rent Upside (“Rent Gap”)
Ichigo Leasing Focused on Existing Tenants with Below-Market Rents
Rent Gap Between Current Rent vs. Market Rent

15%

(JPY million)

Rent Gap by Fiscal Period≧10%≧0% , <10%≧-10%, < 0%<-10%263 (34.1%)

13.66%
12.01%All

Central Tokyo

191 (24.8%)

12.15%

8.84%

10%

9.10%

10.95%
8.19%

178 (23.1%)

8.33%

142 (18.2%)

5%

1.48%

1.48%

1.09%
-0.12%

0.40%

0.21%

-5%
Oct 2014

Apr 2015* Market rent data from CBREOct 2015

86

Apr 2016

Oct 2016

Apr 2017

35
Below Market Rent

0.50%

Apr 2014

60
56

2.03%

0%

43

40

34

Oct 2013

83

53

63

19

19

Oct 2017

Apr 2018

59

66

29

28

Oct 2018

Apr 2019 and after* Excludes scheduled tenant departures.
Percentage in parentheses at top of bars shows thepercentage of leases up for renewal in that period.

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

42

Free Rent Incentives
Free Rent Incentives

Rental Income Loss due to Free Rent
(Months)(JPY million)

5
Average of Tokyo Metropolitan Area

4.4

Average of Regional Cities

Loss from Free Rent

Actual Rent Income

4

143

3.1
49
3

2.6

112

67

2.6
40

2.4
2.0

2.4

2

5,989

1.8
1.6

5,228

5,315

Oct 2015

Apr 2016

6,251

4,159

1

1.2

0
Apr 2015

Oct 2015

Apr 2016

Oct 2016

Apr 2017

Apr 2015© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Oct 2016

Apr 2017

43

Highly Diversified Tenant Mix
As of April 30, 2017

Tenant Profiles by Industry(based on No. of tenants)

Construction
3%

Share of Top 10 Tenants

Education
2%

Real Estate3%

Total Number of Tenants: 897
13.2% by Leased Area
14.0% by Rental Income

Other
7%

Top 10 Tenants by Leased Area
Finance5%Service27%

Restaurant/Hotel
7%

Manufacturing
13%

Retail18%
IT
15%

Asset Name

Leased Area(m 2)

Industry

Share

1

Ichigo Akihabara North Building/
Ichigo Omiya Building

Manufacturing

6,303

2.6%

2

Lions Square Kawaguchi

Supermarket

4,263

1.7%

3

Ichigo Sasazuka Building

Telecommunication

3,827

1.6%

4

Konami Sports Club Izumi Fuchu

Sports Club

3,733

1.5%

5

Nishiki First Building

Telecommunication

3,324

1.4%

6

Ebisu Green Glass

Telecommunication

2,863

1.2%

7

Ichigo Hiroo Building

Retail

2,417

1.0%

8

Ichigo Gotanda Building

Retail

1,925

0.8%

9

Ichigo Ikebukuro East Building

Service

1,872

0.8%

10

Ichigo Toyamaeki Nishi Building/
Ichigo Takamatsu Building

Manufacturing

1,846

0.8%

32,376

13.2%

Total

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

44

Value-Add Capex Tailored to Tenant Needs

Maintenance Cost, Capex, and Depreciation

October 2017 Capex Plan
(JPY million)

1,250
Maintenance

1,000

Capex

Depreciation

923

921

918

925

Asset Name

Details

Investment

Ichigo Omiya Building

Air Conditioning Upgrade (2nd of 2 phases)

JPY 92M

Ichigo Sasazuka Building

Air Conditioning Upgrade (2 floors)

JPY 26M

Oimachi Center Building

Sub-divide units into smaller office space

JPY 20M

Ichigo Ofuna Building

Exterior Wall Repair (1st of 2 phases)

JPY 20M

Ichigo Machida East Building

Elevator Upgrades

JPY 19M

750
635

April 2018 Capex Plan

570
504

500

454

250
97

145

128

110

0
Oct 2016

Apr 2017

Oct 2017(Forecast)

Asset Name

Details

Investment

Ichigo Akihabara North Building

Lighting Replacement to LED (all floors)

JPY 54M

Ichigo Sasazuka Building

Air Conditioning Upgrade (2 floors)

JPY 33M

Ichigo Ofuna Building

Exterior Wall Repair (2nd of 2 phases)

JPY 20M

Lions Square Kawaguchi

Parking Space Renovation

JPY 18M

Ichigo Jingumae Building

Common Area Renovation

JPY 17M

Apr 2018(Forecast)© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

45

Portfolio Asset Seismic Safety
Acquisition Guidelines Seismic Safety：Compliant with new seismic standard Seismic PML1：Stand-alone PML of 20% or less, with a non-exceedance probability of
90% for the Entire Portfolio
Portfolio Assets Seismic Safety Profile (as of May 10, 2017)
Assets Built under Old SeismicStandard, but Seismic Renovation
Completed (6 assets)(Leasable Area Ratio: 9.3%)

Assets Built under Old SeismicStandard, but Original Construction
Met New Earthquake ResistanceStandard (3 assets)2

Portfolio PML

2.40%(Leasable Area Ratio: 3.3%)

as of May 10, 2017
Assets Built under Old Seismic Standard, but
Seismic Renovation Completed (6 assets)
Ichigo Burg Omori Building, Ichigo Fiesta Shibuya Building, Ichigo
Sakae Building, Ichigo Mita Building, Ichigo Gotanda Building, andIchigo Higashi Ikebukuro Building
New Earthquake ResistanceStandard (76 assets)（Leasable Area Ratio: 87.4%）

Assets Built under Old Seismic Standard, but Original Construction
Met New Earthquake Resistance Standard (3 assets)2
Ichigo Ginza 612 Building, Ichigo Ofuna Building, andIchigo Nagoya Building

1 PML (Probable Maximum Loss) is the maximum expected loss from a large-scale earthquake (defined as an earthquake with an expected frequency of occurrence once

every 475 years, or a 10% chance of occurrence within the next 50 years) occurring in the next 50 years, expressed as a ratio to the estimated replacement cost.
2 Assets evaluated as having seismic strength equivalent to new earthquake resistance standards and for which a third-party seismic evaluation report has been obtained.

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

46

Mid-Size Office Portfolio Growth
As of October 31, 2016

As of April 30, 2017

As of May 10, 2017Total

85 assets

82 assets

85 assets

Office70 assets

71 assets

74 assets

Other

15 assets

11 assets

11 assets

Total

JPY 191.0B

JPY 189.8B

JPY 196.9B

Office

88%

90%

91%

Other

12%

10%

9%

Central Tokyo

54%

55%

55%

Tokyo Metropolitan Area

25%

24%

24%

Four Major Regional Cities

15%

15%

14%

Other Regional Cities

6%

6%

6%

Appraisal Value

JPY 207.5B

JPY 209.6B

JPY 217.0B

Leasable Area

257,142m 2

253,545m 2

262,707m 2

Occupancy

98.2%

98.6%

98.4%

No. of Tenants

892

897

922

NOI Yield

5.3%

5.5%

5.5%

No. of Assets

Portfolio SizeArea

* Leasable Area is as of May 10, 2017. Occupancy and number of tenants are as of April 30, 2017 for existing assets and as of acquisition dates for
those acquired in the October 2017 period.
* NOI Yield as of May 10, 2017 and April 30, 2017 are provisionally calculated excluding assets sold during the fiscal period; NOI Yield of assets acquired in
the October 2017 period are determined from the annual NOI calculated using a DCF method based on appraisal value at acquisition.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

47

90% Office & 79% Tokyo Metropolitan Area Portfolio (Apr 2017)
As of April 30, 2017
No. of Assets
Total Acquisition PriceAppraisal Value
Leasable Area
Occupancy

82 Assets
JPY 189.87B
JPY 209.67B
253,545m2
98.6%

By Asset Type
Sapporo0.5
0.3%

Map Key・Location・Acquisition Price (JPY billion)
・Share of Portfolio

Tokyo
Metro
Area
149.6
79%

Other
10%

Office90%

Sendai1.8
1%

By Size

Kansai6.3
3%

Fukuoka

2.0
1%<JPY 1B
4%

Nagoya
20.5
11%

Other
8.9
5%

>JPY 3B50%

JPY 1B-2B
29%

JPY 2B-3B
17%© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

48

91% Office & 80% Tokyo Metropolitan Area Portfolio (May 2017)
As of May 10, 2017
No. of Assets
Total Acquisition PriceAppraisal Value
Leasable Area
Occupancy

85 Assets
JPY 196.95B
JPY 217.05B
262,707m2
98.4%

By Asset Type
Sapporo0.5
0.3%

Map Key・Location・Acquisition Price (JPY billion)
・Share of Portfolio

Tokyo
Metro
Area
156.7
80%

Other
9%

Office91%

Sendai1.8
1%

By Size

Kansai6.3
3%

Fukuoka

2.0
1%<JPY 1B
3%

Nagoya
20.5
10%

Other
8.9
5%

>JPY 3B50%

JPY 1B-2B
29%

JPY 2B-3B
18%© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

49

Portfolio Details (1)As of April 30, 2017
Asset
Type

OfficeNo.

Asset Name

Area

Location

Acquisition
Price(JPY M)

Book Value(JPY M)

Leasable
Area
(m 2)

Occupancy(%)

Apr 2017 Appraisal

Oct 2016 Appraisal

ChangeValue(JPY M)

Value(JPY M)

Value(JPY M)

Cap rate(%)

Cap rate(%)

O-02

Ichigo Nishisando Building

Central Tokyo

Shibuya-ku, Tokyo

3,254

3,408

4,564.63

100.0%

2,977

4.4%

2,926

4.4%

+51

O-03

Ichigo Mita Building

Central Tokyo

Minato-ku, Tokyo

2,740

2,744

4,125.52

78.3%

3,202

4.5%

3,019

4.5%

+183
+100

O-04

Ichigo Nanpeidai Building

Central Tokyo

Shibuya-ku, Tokyo

1,920

1,939

1,925.24

100.0%

2,450

3.7%

2,350

3.8%

O-05

Ichigo Hanzomon Building

Central Tokyo

Chiyoda-ku, Tokyo

1,550

1,525

2,080.37

100.0%

1,760

4.1%

1,780

4.2%

-20

O-06

Ichigo Hijirizaka Building

Central Tokyo

Minato-ku, Tokyo

1,200

1,211

1,947.90

100.0%

1,370

4.7%

1,350

4.8%

+20

O-07

Ichigo Shibuya Kamiyamacho Building

Central Tokyo

Shibuya-ku, Tokyo

1,505

1,407

1,321.54

100.0%

1,713

4.1%

1,712

4.1%

+1

O-08

Ichigo Akasaka 5 Chome Building

Central Tokyo

Minato-ku, Tokyo

735

725

686.50

88.0%

781

4.0%

780

4.0%

+1

O-09

Ichigo Shibakoen Building

Central Tokyo

Minato-ku, Tokyo

1,100

1,102

1,602.29

100.0%

1,080

4.5%

1,050

4.6%

+30

O-10

Ichigo Ebisu Nishi Building

Central Tokyo

Shibuya-ku, Tokyo

1,917

1,930

1,484.39

100.0%

2,217

4.2%

2,210

4.2%

+7

O-11

Ichigo Ginza 612 Building

Central Tokyo

Chuo-ku, Tokyo

1,773

1,767

1,388.35

94.9%

1,946

4.2%

1,946

4.2%

–

O-12

Ichigo Uchikanda Building

Central Tokyo

Chiyoda-ku, Tokyo

1,140

1,124

1,378.83

100.0%

1,150

4.5%

1,120

4.6%

+30

O-14

Ichigo Yotsuya 4 Chome Building

Central Tokyo

Shinjuku-ku, Tokyo

550

522

780.64100.0%

562

4.4%

551

4.5%

+11

O-15

Ichigo Tameike Building

Central Tokyo

Minato-ku, Tokyo

580

539

494.14100.0%

673

4.0%

651

4.1%

+22

O-16

Ichigo Jinbocho Building

Central Tokyo

Chiyoda-ku, Tokyo

1,820

1,817

1,891.01

100.0%

2,200

4.3%

2,160

4.4%

+40

O-17

Ichigo Hakozaki Building

Central Tokyo

Chuo-ku, Tokyo

1,150

1,162

2,387.34

100.0%

1,140

4.6%

1,110

4.7%

+30

O-18

Ichigo Kudan 2 Chome Building

Central Tokyo

Chiyoda-ku, Tokyo

763

742

1,288.31

100.0%

888

4.5%

885

4.5%

+3

O-19

Ichigo Kudan 3 Chome Building

Central Tokyo

Chiyoda-ku, Tokyo

844

835

1,302.43

100.0%

844

4.6%

827

4.7%

+17

O-20

Ichigo Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

5,060

4,914

5,346.76

100.0%

5,820

4.7%

5,740

4.8%

+80

O-21

Ichigo Shin Yokohama Building

Tokyo Metro Area Yokohama City, Kanagawa

1,816

1,742

4,021.32

100.0%

1,784

5.1%

1,780

5.1%

+4

O-22

Ichigo Minami Ikebukuro Building

Tokyo Metro Area Toshima-ku, Tokyo

1,460

1,380

1,491.51

100.0%

1,570

4.2%

1,590

4.3%

-20

O-23

Ichigo Nakano North Building

Tokyo Metro Area Nakano-ku, Tokyo

764

754

1,250.85

100.0%

829

5.0%

882

5.1%

-53

O-24

Ichigo Eitai Building

Tokyo Metro Area Koto-ku, Tokyo

1,490

1,476

2,605.54

100.0%

1,240

5.0%

1,240

5.1%

–

O-26

Ichigo Ikejiri Building

Tokyo Metro Area Meguro-ku, Tokyo

2,030

1,974

2,385.69

100.0%

2,230

4.6%

2,150

4.7%

+80

O-27

Ichigo Nishi Ikebukuro Building

Tokyo Metro Area Toshima-ku, Tokyo

639

616

1,261.91

100.0%

778

4.6%

706

4.7%

+72

O-28

Ichigo Nishi Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

765

771

1,329.06

100.0%

793

4.7%

778

4.8%

+15

O-29

Ichigo Kichijoji Building

Tokyo Metro Area Musashino City, Tokyo

2,160

2,229

4,210.87

100.0%

2,590

5.0%

2,570

5.1%

+20

O-34

Ichigo Sakae Building

Four Major Cities Nagoya City, Aichi

4,705

4,702

3,928.12

100.0%

5,191

5.0%

5,191

5.0%

–

O-37

Ichigo Marunouchi Building

Four Major Cities Nagoya City, Aichi

6,710

6,052

8,009.11

100.0%

7,180

4.6%

6,970

4.7%

+210

O-38

Ichigo Toyamaeki Nishi Building

Other Regional Cities Toyama City, Toyama

1,650

1,509

8,601.71

98.5%

1,730

6.1%

1,730

6.2%

–

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

50

Portfolio Details (2)As of April 30, 2017
Asset
Type

No.

O-39

OfficeAsset Name

Area

Location

Acquisition
Price(JPY M)

Book Value(JPY M)

Leasable
Area
(m 2)

Ichigo Mirai Shinkin Building

Other Regional Cities Oita City, Oita

1,158

1,157

3,551.46

Occupancy(%)

Apr 2017 Appraisal

Oct 2016 Appraisal

ChangeValue(JPY M)

Value(JPY M)

Value(JPY M)

Cap rate(%)

Cap rate
(%)

96.6%

1,270

6.1%

1,260

6.1%

+10

O-42

Ichigo Takamatsu Building

Other Regional Cities Takamatsu City, Kagawa

3,010

2,527

6,329.33

98.7%

3,240

6.5%

3,190

6.6%

+50

O-46

Ichigo Kanda Nishikicho Building

Central Tokyo

Chiyoda-ku, Tokyo

2,130

2,049

2,523.09

100.0%

2,890

4.0%

2,780

4.1%

+110

O-47

Ichigo Akihabara North Building

Central Tokyo

Chiyoda-ku, Tokyo

5,500

5,642

6,250.53

100.0%

6,790

4.6%

6,700

4.7%

+90

O-48

Ichigo Sakaisuji Honmachi Building

Four Major Cities Osaka City, Osaka

1,940

1,850

3,729.35

100.0%

2,300

4.7%

2,280

4.8%

+20

O-49

Ichigo Kanda Ogawamachi Building

Central Tokyo

Chiyoda-ku, Tokyo

2,210

2,199

2,295.57

100.0%

2,420

4.3%

2,410

4.4%

+10

O-50

Ichigo Hatchobori Building

Central Tokyo

Chuo-ku, Tokyo

1,905

1,863

2,697.36

100.0%

2,510

4.6%

2,470

4.7%

+40

O-51

Ebisu Green GlassCentral Tokyo

Shibuya-ku, Tokyo

5,900

5,863

3,159.27

100.0%

6,560

3.7%

6,540

3.7%

+20

O-52

Ichigo Omori Building

Central Tokyo

Shinagawa-ku, Tokyo

3,850

3,817

3,585.92

100.0%

4,160

4.5%

4,160

4.5%

–

O-53

Ichigo Takadanobaba Building

Central Tokyo

Shinjuku-ku, Tokyo

1,580

1,584

1,606.92

100.0%

1,840

4.2%

1,790

4.3%

+50

O-54

Ichigo Omiya Building

Tokyo Metro Area Saitama City, Saitama

3,430

3,598

6,180.68

100.0%

3,730

5.3%

3,680

5.4%

+50

O-55

Ichigo Sagamihara Building

Tokyo Metro Area Sagamihara City, Kanagawa

1,174

1,242

2,960.81

100.0%

1,280

5.5%

1,260

5.6%

+20

O-56

Ichigo Ofuna Building

Tokyo Metro Area Kamakura City, Kanagawa

2,000

1,985

2,364.71

100.0%

2,380

5.4%

2,270

5.4%

+110

O-57

Ichigo Sendai East Building

Other Regional Cities Sendai City, Miyagi

1,840

1,760

5,205.49

93.3%

2,070

5.8%

2,040

5.9%

+30

O-58

Ichigo Kumamoto Building

Other Regional Cities Kumamoto City, Kumamoto

1,450

1,434

4,498.16

95.1%

1,430

6.1%

1,430

6.1%

–

O-59

Ichigo Jingumae Building

Central Tokyo

Shibuya-ku, Tokyo

7,200

7,367

4,422.35

97.0%

7,710

3.5%

7,710

3.6%

–

O-60

Ichigo Shibuya Dogenzaka Building

Central Tokyo

Shibuya-ku, Tokyo

3,650

3,692

2,789.86

100.0%

4,790

3.6%

4,660

3.7%

+130

O-61

Ichigo Hiroo Building

Central Tokyo

Shibuya-ku, Tokyo

3,960

4,012

3,510.44

100.0%

4,380

4.0%

4,320

4.1%

+60

O-62

Ichigo Sasazuka Building

Central Tokyo

Shibuya-ku, Tokyo

4,780

4,814

6,425.29

94.4%

5,060

4.2%

5,020

4.3%

+40

O-63

Ichigo Nihonbashi East Building

Central Tokyo

Chuo-ku, Tokyo

4,700

4,669

4,216.97

100.0%

5,440

4.0%

5,290

4.1%

+150

O-64

Ichigo Sakurabashi Building

Central Tokyo

Chuo-ku, Tokyo

2,500

2,587

2,971.22

100.0%

2,730

4.2%

2,730

4.2%

–

O-65

Ichigo Shinkawa Building

Central Tokyo

Chuo-ku, Tokyo

2,360

2,391

2,312.03

100.0%

2,710

4.1%

2,710

4.1%

–

O-66

Ichigo Kudan Building

Central Tokyo

Chiyoda-ku, Tokyo

3,190

3,237

3,090.65

100.0%

3,370

4.1%

3,350

4.2%

+20

O-67

Ichigo Higashi Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

3,660

3,688

4,548.10

100.0%

4,110

4.2%

4,020

4.3%

+90

O-68

Axior Mita

Central Tokyo

Minato-ku, Tokyo

1,800

1,783

2,369.82

100.0%

2,040

4.1%

1,970

4.1%

+70

O-69

Ichigo Higashi Ikebukuro Building

Tokyo Metro Area Toshima-ku, Tokyo

4,570

4,605

4,553.90

100.0%

4,940

4.2%

4,920

4.3%

+20

O-70

Koriyama Big-i (Office Section)

Other Regional Cities Koriyama City, Fukushima

1,660

1,568

3,433.07

100.0%

1,790

5.2%

1,770

5.2%

+20

O-71

Ichigo Kawasaki Building

Tokyo Metro Area Kawasaki City, Kanagawa

1,750

1,783

3,665.34

100.0%

2,030

4.4%

1,980

4.5%

+50

O-72

Ichigo Shibuya East Building

Central Tokyo

1,350

1,356

1,041.36

100.0%

1,490

3.7%

1,460

3.8%

+30

Shibuya-ku, Tokyo© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

51

Portfolio Details (3)As of April 30, 2017
Asset
Type

No.

O-73

OfficeAsset Name

Ichigo Ningyocho Building

Area

Central Tokyo

Location

Chuo-ku, Tokyo

Acquisition
Price(JPY M)

1,450

Book Value(JPY M)

Leasable
Area
(m2)

1,465

1,769.09

Occupancy(%)

100.0%

Apr 2017 Appraisal

Oct 2016 Appraisal

ChangeValue(JPY M)

Value(JPY M)

Value(JPY M)

1,560

Cap rate
(%)

4.2%

1,550

Cap rate
(%)

4.2%

+10

O-74

Ichigo Nishi Honmachi Building

Four Major Cities Osaka City, Osaka

2,190

2,180

6,151.98

94.0%

2,340

4.9%

2,330

5.0%

+10

O-75

Ichigo Hakata Building

Four Major Cities Fukuoka City, Fukuoka

1,380

1,385

2,423.86

100.0%

1,460

5.0%

1,440

5.1%

+20

O-76

Nishiki First Building

Four Major Cities Nagoya City, Aichi

2,000

2,000

3,324.54

100.0%

2,110

4.8%

2,080

4.9%

+30

O-77

Ichigo Ikenohata Building

Tokyo Metro Area Taito-ku, Tokyo

5,130

5,161

5,504.02

100.0%

5,330

4.3%

5,310

4.3%

+20

O-78

Ichigo Ikebukuro East Building

Tokyo Metro Area Toshima-ku, Tokyo

3,010

3,010

3,118.69

100.0%

3,210

4.3%

3,170

4.3%

+40

O-79

Ichigo Motoazabu Building

Central Tokyo

1,890

1,900

1,329.96

100.0%

1,970

3.7%

1,970

3.7%

–

O-80

Ichigo Otsuka Building

Tokyo Metro Area Toshima-ku, Tokyo

2,740

2,751

3,679.70

100.0%

2,930

4.4%

2,880

4.4%

+50

O-81

Ichigo Nagoya Building

Four Major Cities Nagoya City, Aichi

3,420

3,448

4,930.30

100.0%

3,620

4.6%

3,530

4.7%

+90

O-82

Ichigo Fushimi Building

Four Major Cities Nagoya City, Aichi

2,340

2,348

4,155.57

92.8%

2,410

4.8%

2,400

4.9%

+10

O-83

Ichigo Nishiki Building

Four Major Cities Nagoya City, Aichi

1,330

1,322

2,006.78

100.0%

1,410

4.7%

1,390

4.8%

+20

Minato-ku, Tokyo

O-84

Ichigo Minami Morimachi Building

Four Major Cities Osaka City, Osaka

1,040

1,035

2,521.51

100.0%

1,110

4.7%

1,110

4.8%

–

O-85

Ichigo Shibuya Udagawacho Building

Central Tokyo

3,500

3,624

1,491.38

89.1%

3,920

3.5%

3,780

3.6%

+140

171,417

170,402

223,788.31

98.5%

189,528

Shibuya-ku, Tokyo
Subtotal - Office© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

186,864+2,75752

Portfolio Details (4)As of April 30, 2017
Asse t
T ype

Other

No.

Asset Name

Area

Acquisition
Price(JPY M)

Location

Shibuya-ku, Tokyo

Book Value(JPY M)

Leasable
Area
(m 2)

Occupancy(%)

Apr 2017 Appraisal

Oct 2016 Appraisal

ChangeValue(JPY M)

Value(JPY M)

Value(JPY M)

Cap rate(%)

Cap rate(%)

Z-02

Ichigo Fiesta Shibuya Building

Central Tokyo

1,970

1,975

1,185.85

100.0%

2,130

4.1%

2,100

4.2%

Z-03

Ichigo Burg Omori Building

Tokyo Metro Area Ota-ku, Tokyo

3,218

3,125

5,345.62

92.8%

2,997

5.7%

3,005

5.7%

-8

Z-05

Ichigo Machida East Building

Tokyo Metro Area Machida City Tokyo

1,310

1,276

2,183.65

100.0%

1,540

4.9%

1,490

5.0%

+50

Z-07

Ichigo Sapporo Minami 2 Nishi 3 Building

Four Major Cities Sapporo City, Hokkaido

558

550

1,162.52

100.0%

585

5.2%

584

5.2%

+1

Z-08

Ichigo Daimyo Balcony

Four Major Cities Fukuoka City, Fukuoka

638

589

765.61100.0%

677

4.7%

669

4.8%

+8

Z-09

Konami Sports Club Izumi Fuchu

Other Regional Cities Izumi City, Osaka

1,210

1,130

3,733.68

100.0%

1,450

5.7%

1,420

5.8%

+30

Z-10

Ichigo Shibuya Bunkamura Dori Building

Central Tokyo

Z-11

Twicere Yokohama Isogo (Retail Section)

Tokyo Metro Area Yokohama City, Kanagawa

Z-12

Lions Square Kawaguchi

Tokyo Metro Area Kawaguchi City, Saitama

2,430

2,386

7,788.09

100.0%

2,630

4.6%

2,610

4.7%

+20

Z-13

Ichigo Shin Yokohama Arena Dori Building

Tokyo Metro Area Yokohama City, Kanagawa

1,700

1,689

1,971.34

100.0%

1,750

5.1%

1,720

5.2%

+30

Z-14

Ichigo Kamata Building

Tokyo Metro Area Ota-ku, Tokyo

4.7%

1,490

4.8%

Shibuya-ku, Tokyo

+30

2,400

2,472

778.77100.0%

3,010

3.4%

3,040

3.5%

-30

1,620

1,551

2,717.77

100.0%

1,870

5.3%

1,870

5.3%

–

1,400

1,449

2,124.68

100.0%

1,500

Subtotal - Other

18,454

18,19629,757.58

98.7%

20,13919,998+179+10

Total (82 Assets)

189,871

188,598

253,545.89

98.6%

209,667

206,862+2,936

Reference: Assets Acquired in the October 2017 Period
Asset
Type

OfficeNo.

Asset Name

Area

Acquisition
Price(JPY M)

Location

O-86

Win Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

O-87

Ichigo Hongo Building

Tokyo Metro Area Bunkyo-ku, Tokyo

O-88

Oimachi Center Building

Central Tokyo

AcquisitionDate

3,100 May 10, 2017

Shinagawa-ku, Tokyo

Leasable
Area
(m 2)

Occupancy(%)

Appraisal at Acquisition
Value(JPY M)

3,689.88

100.0%

2,300 May 10, 2017

2,722.58

100.0%

2,370

4.4%

1,680 May 10, 2017

2,748.73

77.8%

1,750

4.4%

98.4%

217,047

Subtotal

7,080

9,161.19

82 Assets Held on April 30, 2017 ＋ New Acquisition 3 Assets = Total 85 Assets

196,951

262,707.08© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

3,260

Cap rate
(%)

4.2%

7,380

53

Share Price (November 1, 2011 to May 31, 2017)(JPY)(Traded Volume, Shares)

120,000
Traded Volume

100,000

Ichigo Office REIT

TSE REIT Index

Post-merger high (closing price): JPY 101,000 (Jan 15, 2015)
Post-merger low (closing price): JPY 25,310 (Nov 22, 2011)
April 2017 period average daily volume ： 4,289 shares

Additional issuance
JPY 83,167 (issue price)
Dec 3, 2014 (payment date)

Additional issuance
JPY 82,212 (issue price)
May 1, 2015 (payment date)

50,000Additional issuance
JPY 79,365 (issue price)
May 23, 2016 (payment date)

40,000* As of April 30, 2017
Additional issuance
JPY 62,595 (issue price)
May 27, 2013 (payment date)

80,000Additional issuance
JPY 60,157 (issue price)
Dec 3, 2013 (payment date)

30,00060,000Effective merger day
JPY 33,500 (closing)Nov 1, 2011

20,00040,00010,00020,000

0

2012

2013

2014

2015

* TSE REIT Index adjusted, with the November 1, 2011 Ichigo Office REIT price as the base price.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

2016

2017

0

Data from Bloomberg

54

Shareholder Composition
As of April 30, 2017

Major Shareholders

Shareholdings by Shareholder TypeNo. ofSharesShare

344,190

22.5%

Japan Trustee Services Bank, Ltd., Trust
Account

143,960

9.4%

Trust & Custody Service Bank, Ltd., Securities
Investment Trust Account136,181

8.9%

4 The Master Trust Bank of Japan, Trust Account

119,259

7.8%

5 NOMURA BANK (LUXEMBOURG) S.A.

113,592

7.4%

Name
1 Ichigo Trust Pte. Ltd.
2
3

6 Morgan Stanley MUFG Securities Co., Ltd.

63,997

Foreign Corporations & Individuals

4.2%

BNYM SA / NV FOR BNYM FOR BNY GCM
7
CLIENT ACCOUNTS M LSCB RD

62,400

The Nomura Trust and Banking Co., Ltd.,
Investment Trust Account41,9402.7%

9 GOLDMAN SACHS INTERNATIONAL

28,647

1.9%

STATE STREET BANK AND TRUSTCOMPANY 505012

26,4531.7%

1,080,619

70.5%

8

10

Total

4.1%

659,674 shares(46.5%)

716,993 shares(46.7%)

Other Domestic Corporations

731,446 shares(47.7%)

Financial Institutions(including securities companies)

16,114 shares(1.1%)

17,163 shares(1.1%)

18,354 shares(1.1%)

573,503 shares(40.4%)

597,758 shares(39.0%)

565,435 shares(36.9%)

167,032 shares(11.7%)

200,373 shares(13.0%)

217,052 shares(14.1%)

Apr 30, 2016
(1,416,323 shares) *Oct 31, 2016
(1,532,287 shares) *Apr 30, 2017
(1,532,287 shares) *Domestic Individuals & Others

Note:
115,964 new shares were
issued via a public offeringon May 9, 2016.

* Number of Shares Outstanding

Shareholders by Shareholder Type

Domestic Individuals & Others
Financial Institutions(including securities companies)
City banks, trust banks
Regional banks
Other (including securities companies)
Other Domestic Corporations
Foreign Corporations & Individuals
Total© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Apr 30, 2017
Apr 30, 2016
Oct 31, 2016
Shareholders Shareholders Shareholders
Share15,64918,15018,840
97.5%
57

63

65

0.3%

9
5
43
256
142
16,104

10
8
45
284
144
18,641

10
6
49
279
143
19,327

0.1%
–
0.3%
1.4%
0.7%
100.0%

55

Appendix: About Ichigo Office REIT

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

56

Specialized Office REIT
Specialized Office REIT Focusing on Mid-Size Offices, an Asset Class that
Offers Both Return Stability and Upside Potential
 Mid-size office characteristics‒ Stable cashflows supporting earnings and dividend stability for shareholders‒ Upside earnings potential in economic upturns‒ Ability to increase earnings and value via value-add

 Portfolio focused on Tokyo Metropolitan Area
 Driving accretive growth via strategic value-add and hands-on asset
management© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

57

Historic Operating Results and Current Targets
Stage I

Stage II

Stage III

Stage IV

Foundation for Growth

Accretive Growth Cycle

Enhance Profitability

Increase Size & Scale

Merger
Nov 1, 2011

April
2012

71

No. of Assets

October
2012

April
2013

67

67

4

1
1

Acquisition
Sale

October
2013

April
2014

October
2014

66

68

71

1

3
1

4
1

April
2015

Stage V
Lay Foundation for Sustainable
Dividend Growth
April
October
2016
2016

October
2015

70

65

77

1

11
16

13
1

Stage VI
Lay Foundation forLong-Term Growth
April
October
2017
2017

73

85

82

85

1
4

3

4

13
1

As of
May 31, 2017

Total Assets
JPY 107.9B

OfficeJPY 74.3B

MergerEventsJPY 104.8B

OfficeJPY 71.1B

JPY 106.1B

OfficeJPY 72.4B

JPY 104.3B

OfficeJPY 70.6B

Comprehensive
Refinancing

JPY 112.3B

JPY 114.3B

JPY 165.6B

JPY 162.7B

OfficeJPY 141.6B

OfficeJPY 139.6B

JPY 123.3B

JPY 191.0B

JPY 189.8B

OfficeJPY 167.9B

OfficeJPY 171.4B

Accretive PO

Strategic
Restructuring

JPY 196.9B
OfficeJPY 178.4B

JPY 114.0B
OfficeJPY 95.8B

OfficeJPY 77.5B

OfficeJPY 75.5B

Accretive PO

Accretive PO

OfficeJPY 75.1B

Accretive PO

Accretive PO

Strategic
Restructuring

Transition to Pure
Office REIT

JCR Credit Rating
ADeCollateralizationof All Loans© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

58

Building a Trusted Ichigo Brand – Hospitality and Service
Increase Customer Satisfaction via Tailored Tenant Services
 Assure tenants’ safety and comfort via implementation of Ichigo Property
Management Standard Ichigo technical support team on the ground in Kumamoto on the first day
after the April 2016 earthquake
Elevator Emergency Supply Cabinet

Ichigo Umbrellas for Tenants

Kumamoto Disaster Recovery

Technical assistancefor reconstruction
and rebuilding© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Delivery of essential goods

59

Ichigo Safety, Quality, and Design
Improve the safety, quality, and design of assets via Ichigo’s
architectural and engineering capabilities© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

60

Tenant-Focused
Increasing Occupancy with Ichigo’s Pre-fitted and Furnished
Ichigo Layout Office High-function, high-aesthetics, low-cost Differentiating Ichigo’s office assets to raise their profile and lead to rapid lease-up
 Lowers tenants’ up-front costs and saves moving costs and move-in time
Ichigo Layout Office Examples
Ichigo Nishi Gotanda Building

Ichigo Shibakoen Building

Maximize thepotential of auniquely-shaped
officeIchigo Jimbocho Building

Redesign and renovate© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Advantages for Tenants

・Cost-saving
・Quick start-up

Advantages for
Ichigo Office REIT

・Competitive
differentiation
・Higher asset profile
・Faster leasing

61

Ongoing Cost Management and Efficiencies
Economies of Scale Allow Delivering Higher Quality at Lower Cost
Efficient Management StructureStandardize Consumables

Property Management
Company (PM)Facility Management
Company (FM)Manages building
management (BM)companies
BM

BM

BM

・・・

Cost Efficiency Examples

BM

Strengthen Facility Management Function

・Realizing cost savings via standardization andcentralized purchasing of toilet paper(savings: JPY 2.18M/year) & liquid soap (savings: JPY
370 thousand/year)
・Standardize and centrally purchase fire extinguishers
and disaster-use cabinets
Standardize Construction
・Reduced construction costs by standardizing raised
access flooring (OA floor) construction and monitoring
and controlling order flow

・ Choose facility managers best able to implement
Ichigo Office brand building management specification
・ Reduce costs via efficient operations while maintaining
Ichigo quality standards
Efficient BM Company Management
・Integrate BM activity regionally at one BM company
・FMs handle legal checks and procurement ofconsumables, delivering both integrated management
and economies of scale

Standardize OA Module Floors
Lower Electricity Costs with New EPCOs
・Lower electricity costs by switching to new electric powercompanies (PPS, Power Producer and Supplier)© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

62

Sustainability Initiatives
Environmental Sustainability Policy
To protect the earth that we all share, Ichigo Office REIT believes that working on behalf of the environment and society is
its fundamental social responsibility and will support its sustainable growth. Ichigo Office REIT has thus madeEnvironmental Sustainability a key priority, and has established the following Environmental Sustainability Policy to actively
work to reduce Ichigo’s environmental impact and support environmentally-positive outcomes.
1. Harmony with the Environment
Ichigo will actively monitor and minimize the environmental impact of its real estate operations.
2. Energy Conservation, CO2 Emissions Reduction, and Recycling
Ichigo will seek a low-carbon, low-waste society by working to reduce its energy consumption, extend the useful life of its assets,
actively recycle, and reduce waste and water consumption.
3. Regulatory and Environmental Compliance
Ichigo will comply with all environmental laws and regulations and all of Ichigo’s own independently-established environmental rules.
Ichigo will also carefully monitor and comply with all applicable changes in laws and regulations.
4. Training and AwarenessIchigo will hold training programs to promote understanding of this Environmental Sustainability Policy and increase environmental
sustainability awareness among all Ichigo employees and staff. Ichigo will also promote environmental sustainability in coordination
with Ichigo stakeholders, seeking understanding and cooperation on environmental sustainability from Ichigo partner companies andtenants.
5. Environmental Performance Communication and Disclosure
Ichigo will work to communicate this Environmental Sustainability Policy and Ichigo’s environmental sustainability initiatives to its
shareholders and to society at large. Ichigo will also seek to obtain sustainability certifications on an ongoing basis.
6. Green Procurement
Ichigo will implement green procurement measures, such as environmentally-sensitive building materials and sustainable design, in
Ichigo’s building renovations, as well as selecting partner companies based on their environmental sustainability initiatives.

GRESB Participation
GRESB is a global organization comprised of institutional investors, particularly pension funds, andis designed to assess the sustainability performance of real estate portfolios – a standard used formaking investment decisions. Ichigo Office REIT has been participating in the GRESB real estate
assessment since 2016.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

63

Ichigo Group Synergies and Value-Add
Focus on Assets with Value-Add Potential to Increase Competitiveness inAcquisition and Create Valuation Upside
Acquire from Sponsor

Ichigo Office REIT
(8975)

Ichigo (2337)
Market-Leading
Value-Add Capability
Proactively acquire assets withupside, making maximum useof Ichigo value-add capabilities

Sell for Value-Add
Value-Add
UpsideREITable
Value-Add
Potential

Non-REITable

Acquire from External Seller

Value-Add
Potential

Added
価値向上
Value
Asset
Value
Increase
Via
Value-Add

Asset Warehousing

External

Grow NOI・Stable sourcing backed by Ichigo value-add
capabilities; Ichigo less sensitive to market
environment
・Ichigo Office REIT controls timing
・No competitive bid
・Ichigo (2337) assets fully available to Ichigo
Office REIT for acquisition pipeline

・ Restrictions in asset acquisition timing
・ Competitive bids raise prices
・ Multiple sourcing routes, however, allow
sourcing diversity

Grow Earnings via Accretive
Acquisitions and Organic NOI
GrowthSell Weaker Assets© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

64Mid-Size Office Market Investment Attractiveness (1)Abundant Pool of REITable Assets
 90%+ of Japanese real estate = mid-size High liquidity

Breakdown of buildings by floor area (m²)
< 500

2,000 to 5,000

Broad and Deep Tenant Base High ownership by individuals and “passive
owner” corporations results in inadequatebuilding maintenance Poor seismic reinforcement and low functionality
results in low tenant satisfaction
 Lack of organized specifications of buildings andmanagement

Considerable Value-Add Potential

1,000 to 2,000

5,000 to 10,000>10,000

Mid- to small-size real estate：93% 96% of all corporates have 50 employees or less
 Wide diversity of industries

Largely Untapped by Professional AM

500 to 1,000

43%

0%

25%

20%

40%

60%

15% 10%

80%

3%
4%
100%

Source: Ministry of Land, Infrastructure, Transportation andTourism (2015)

Breakdown of companies by number of employees<5

6 to 20

21 to 50

> 51

% of Companies Suited to Mid-Size Assets：95%

64%

0%

20%

24%

40%

60%

80%

7% 4%

100%

Source: Small and Medium Enterprise Agency (2015)© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

65Mid-Size Office Market Investment Attractiveness (2)Mid-Size Office Rents More Stable than Larger-Size Office Rents
Office Rent Movements in Central Tokyo (Chiyoda, Chuo, & Minato Wards)

140
Very Large

Large

Small/Mid

120

100

80

60

40
Sep 2006

Sep 2007

Sep 2008

Sep 2009

Sep 2010

Sep 2011

Sep 2012

Sep 2013

Sep 2014

Sep 2015

Sep 2016

Source: Sanko Estate Co., Ltd.
Very Large refers to offices with a standard floor area of 660m2 or more. Large are 330 to 660m2. Small/Mid are less than 330m2.
© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

66

Global Best-Practice Corporate GovernanceAll Ichigo Office REIT Directors Are Independent
 Active board oversight Ongoing monitoring

Investment Corporation
Ichigo Office
REIT Asset

Ichigo Office REIT
(TSE 8975)
Shareholder Meeting
RentalIncomeBoard of Directors

Administrative Service
Agreement/Asset
Custodial Service
Agreement/
Shareholder Registrar
Service Agreement

Executive Director Yoshihiro Takatsuka
Supervising Director Takaaki Fukunaga
Supervising Director Masahiro Terada

Administrative Agent,
Custodian, and Shareholder
Registrar
Mizuho Trust & Banking

External Auditor
Grant Thornton Taiyo LLC

Property
Management
Agreement

Property Management
Company

Asset Management Agreement

Asset Management Company
Ichigo Investment Advisors© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

67

About Ichigo (2337) – Ichigo Office REIT’s Sponsor‒ Core Businesses: Real Estate Asset Management, Real Estate Value-Add, Clean Energy‒ Manages 2 TSE REITs (Ichigo Office REIT 8975 & Ichigo Hotel REIT 3463) and a TSE
Solar YieldCo (Ichigo Green 9282)‒ JPX-Nikkei 400 Member‒ Active CSR and Sustainability Commitment■ Ichigo Structure
Ichigo(TSE First Section 2337)

Ichigo Preserves andImproves Real Estate

The word “Ichigo” comes from the ancient Japanese
proverb, Ichigo Ichie, literally meaning “One lifetime,
one encounter.” The phrase was first used by a 16th
century master of the tea ceremony, Sen no Rikyu.
He called upon his disciples to give total focus andsincerity to each act of the tea ceremony for every
guest, because that particular moment will only exist
once and must be fully lived and realized.
Ichigo embraces the Ichigo Ichie philosophy ofsincerity and service, and works to build strong longterm relationships to support the success of ourclients, shareholders, and all stakeholders.

Ichigo Investment Advisors Co., Ltd.

Asset manager of Ichigo Office REIT (8975), Ichigo Hotel REIT (3463), andIchigo Green (9282)

Ichigo Estate Co., Ltd.

Real estate value-add

Ichigo Global Capital Co., Ltd.

Cross-border M&A advisory

Ichigo ECO Energy Co., Ltd.

Clean energy business focusing on utility-scale solar power production,
making purposeful use of unused land nationwide

Ichigo Owners Co., Ltd.

Real estate owner services company

Ichigo Real Estate Services Fukuoka
Co., Ltd.

Real estate business centered on Fukuoka in Kyushu region

Ichigo Marché Co., Ltd.

Operates Matsudo Nanbu wholesale market in Chiba Prefecture

Miyako City Co., Ltd.

Operates Miyako City, a large shopping mall in Miyazaki Prefecture© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

68

Ichigo Office REIT Overview
As of April 30, 2017

Investment Corporation
Name

Ichigo Office REIT Investment Corporation

Securities Code8975

Location

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Executive Director

Yoshihiro Takatsuka

Portfolio

82 Assets

Portfolio Value

JPY 189,871M (based on acquisition price)

Fiscal Periods

November 1 to April 30 and May 1 to October 31

Asset Management Company
Name

Ichigo Investment Advisors Co., Ltd.

President

Wataru Orii

Registration & Membership

Financial Instruments Business Operator (Type ll, Investment Advisory &Agency Services, and Investment Management Services)
The Investment Trusts Association, Japan© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

69

MEMO

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

70

Disclaimer
These materials are for informational purposes only, and do not constitute or form a part of, and should not be construed as, anoffer to sell or a solicitation of an offer to buy any securities of Ichigo Office REIT Investment Corporation (Ichigo Office REIT).
These materials may contain forward-looking statements regarding the intent, belief or current expectations of management of
Ichigo Office REIT with respect to financial condition and future results of operations. These statements are based on certain
assumptions founded on currently available information. Accordingly, such statements are subjects to risks, uncertainties andassumptions and there is no assurance as to actual financial conditions or results of operations. Actual results may vary fromthose indicated in the forward-looking statements. Accordingly, please refrain from solely relying on these statements.
These materials have been created by the management of Ichigo Office REIT and Ichigo Investment Advisors Co., Ltd. (IIA) withthe belief that the information contained is accurate. However, there is no assurance given as to the accuracy, certainty, validity
or fairness of any such information. Please note that the content of these materials is subject to revision or retraction without
prior notice.
This document is a translation. If there is any discrepancy between the Japanese version and the English translation, theJapanese version shall prevail. No copying or reproduction of these materials or part of these materials is allowed withoutobtaining prior consent from Ichigo Office REIT and IIA.

Ichigo Office REIT IR Desk
TEL：03-3502-4891 FAX：03-3502-4894
IR_Office@ichigo.gr.jp
www.ichigo-office.co.jp/english
Ichigo is Japan’s first zero-carbon listed real estate company. We are taking
responsibility for our environmental footprint by offsetting our carbon emissions
and investing in low-carbon technologies such as solar energy.

© 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

71